In the dot com days it was called “gray hair”. As in “they just brought the gray hair in to be CEO or Chairperson, and the founder is assuming the CTO/President/Evangelist role”. Actually, in those days sometimes the founder was forced out all together. And that wasn’t fair. And of course, the dot com bubble exploded. So the model got chucked.

Starting with the social/local/mobile era a new model emerged. Keep the founders and let them take the helm all the way. But we’re now seeing the results of that experiment and with a few exceptions they’re not that pretty either.

Here’s where I see the dangers of inexperienced leadership:

No leadership or management role models. I think it’s very difficult to lead and/or manage other people if someone has never been managed. It’s not innate for most people. It’s a learned skill and some people are better than others at it.

No structural or operational models. One of the reasons data show that startups go through a challenging phase at the 150 people mark is that this is generally time when a formal management structure needs to be put in place. With no big co. experience, it’s hard to know how all the moving parts fit together and what makes the most sense for the company.

Lack of self-knowledge. This one is the most amorphous but also the most important. Facing challenges, solving problems, the way we react and the resulting outcomes all feed our self-knowledge. They teach us what works, what doesn’t, where we’re strong and where we need help. You can’t go around this one, you have to go through.

Lacking any of these slows a companies trajectory. Pairing this inexperience with the relentless pressure of the venture-backed path is practically investor fraud. Inexpert leaders and managers fail to recruit and retain great people. The people they do get can’t/won’t work at their highest capability. Revising structural and operational models takes time, rework and is hell on productivity. And lack of self-knowledge negatively impacts decision making at every turn.

Interestingly, Zuckerberg/Sandberg gave us a new model almost 10 years ago. It pairs a visionary founder with an experienced operator. There’s also been a broad call for increasing diversity in both the general workforce and leadership as there’s plenty of data to back up the improved performance. So why it’s taking so long for experience and diversity to be required components of a growth-stage management team? Why aren’t investors making Series B (or even Series A) contingent on it? How many scandals and plummeting valuations is it going to take?

(Hint: It’s not adding more product features.)

You’ve got a working product, a solid group of early adopters and you’ve raised a little money. But you just can’t get the traction to get to the next level of growth or funding. Does this sound familiar? If so you’re not alone.

This is a recurring theme among early stage startups. And usually the impulse reaction is to try to “fix” the product. So the startup uses whatever runway they have left to improve onboarding or add this or that “must have” feature. Sometimes it works. A lot of times it doesn’t. Why? Because the product isn’t the problem.

If you find your startup in this situation, I suggest you look three other places before you assume it’s a product issue. Your time and resources are precious. Focusing on the right thing is the only way you’re going to stay in the game.

1. The Problem

Go back and take a hard, long look at the problem that you’re trying to solve. How have you defined it? Is it too narrow or too broad? Are you sure it’s a problem that gives a large enough audience a big enough headache to pay for a solution?

Make sure: Without your demo product, have at least 10 conversations with target customers who are not using your product now. Do not tell them your solution. Ask open ended questions. What is your biggest challenge when you X? How does that challenge impact your work or your life? How are you solving/working around that problem now? This might be a great place to use some Design Thinking strategies. Is there a way you can observe your customers dealing with the challenge? Be quiet and take notes. I promise you’ll learn something new about the problem.

Can you use the new insights about the problem to reevaluate your value proposition and gain additional customers with the current iteration of the product?

2. The SolutionMany founders start with an idea rather than a problem. Then, following Lean Startup principles they quickly build an MVP and get feedback. The potential pitfall is that while your idea may be a solution, it may not be the best solution. Evidence of this is when a bunch of early adopters jump on board but then things stall out. In this case, adding features is unlikely to spark more rapid growth.

Make sure: You’ll need to get out of your own head for a bit so you should bring in some outsiders and potential customers. Again, don’t tell them your solution. Instead facilitate — or ask someone else to facilitate — a brainstorming session where you spit out all the ways — even the impractical ways — you might solve the problem. Hint: A best practice here is to give participants the problem ahead of time and have them start thinking about it on their own and preferably write it down so you don’t get caught in group think.

Can you build to a better solution?

3. The CustomerI have a friend that calls that first set of customers — the first market that you target — the first brick. For some companies, this is simply the market where they first started to get some interest — where they got an intro, or a market they know. But it may not be the “best” place to gain the kind of traction needed to get key reference customers or funding.

Make sure: Start by talking with the people currently using your product. How do they describe the value it adds? What does it help them do faster, better or for less money? This is not the time to make assumptions. Get it in their words. Listen carefully. Is everyone using your product saying the same thing or not? Group the strong positives together. The people who are saying that your product fundamentally changes the way they do something. Can you define this as a segment? Is is more narrow or different then the group you thought you were going after?

Does it make sense to hone your targets?

The RewardsThese exercises will reinforce your solution, help you better articulate your value proposition, and focus your growth efforts. This is also great information to have at hand when you’re pitching.

I know it’s scary. What if you find out your solution is somehow wrong? (BTW, this fear is what keeps founders from doing this.) I think that even if you discover the worst, you still win. If you have enough runway you can use what you learn to craft a better solution and pitch that. Part of this process is backing up to move forward. Ask any entrepreneur (not a 25 year old panel pontificator but one with a little gray hair) and they’ll tell you about the times they got it wrong.

Bottom line. It doesn’t matter how many features your product has. If you don’t have the right problem/solution/customer set, your company is dead in the water.

Interested in ditching your commute, working from home or keeping your job but moving to a city where you can actually afford to buy a house? As the CFO/COO of my last startup, I realized that having remote workers (work-from-home and work from where ever) can actually create a pretty compelling competitive advantage. Here’s how:

1. Less expensive labor.

Companies built to operate with a workforce in multiple locations can take advantage of hiring people in locations where it’s cheaper to live and therefore lower average salaries. That means you can either get more runway with the current headcount or you add headcount for the same money.

2. Less competition for labor.

This is related to less expensive labor, but may result in even bigger advantages. Less competition for labor means that you don’t have every other company in town trying to poach your employees as soon as you’ve trained them. The cost of retraining and replacing an employee can cost from 16% of annual salary for an hourly employee to 213% of annual salary for a highly trained position. The cost of replacing employees is almost never factored into financial projections, and yet is a very real drain on resources (both human and financial).

3. Increased productivity.

The SF Bay Area apparently has the highest number of mega-commuters — people who commute more than 90 minutes and 50 miles one-way. LA and New York are not far behind. Imagine recapturing all that time and having ti refocused it on work. Clearly, not everyone will return all that time to work. Some might go to personal pursuits. But that generally leads to more satisfied employees who are in turn….more productive.

4. Lower Rents and Fixed Asset Expenses

If you don’t have everyone in the office everyday, you don’t need as big an office. Maybe you don’t need an office at all. Even if you offer to pay for co-working space for people who don’t want to work at home, it’s still not going to cost you the same as office-space in a desirable location. And if you don’t have an office? Well then, no desks or chairs, refrigerators and ping pong tables. Really, the only thing you have sitting depreciating on your balance sheet is the hardware. You have to do the math as to whether this is actually less expensive since you’re likely going to end up giving stipends for home work stations or to offset co-working spaces. You don’t HAVE to, but if you want to be one of the cool kids, you probably should.

5. Attract to a more diverse group of employees.

There are plenty of studies that show companies with diverse workforces outperform other companies. However, one of the main reasons women leave the workforce is lack of flexibility. And it can’t be fixed by working at home one day a week. It has to be true flexibility. Doctors appointments, sick days, teacher conferences, school holidays and complicated pick-up and drop-offs rarely fit neatly into a set schedule. And the post-tax cost for child-care and/or paying someone else to do all of these things often makes the work/stay home decision a wash. Remote working allows for a more fluid work/home life and will make your company more attractive to parents. But, this kind of flexibility for companies can be disruptive or seen as preferential treatment in companies with conventional structures. But when flexibility and not being co-located are built into the company culture, it can be a beautiful solution.

Are there negatives to fully-distributing the workforce? Yes. Are there tools and processes that make it easier? Yes.

I’ll cover both of those in another post. But given today’s technology, this is totally possible and building this structure and culture could actually be a key factor in your company’s success.

But it’s not true. Most coding requires a working understanding of the concepts taught in Algebra 1. Not trig. Not calculus. Algebra.

So why does that belief exist and persist?

It’s mostly historical. Our stereotype of the computer nerd is associated with the pre dot.com era use of computers to process large amounts of data and solve hard computational problems in areas like aerodynamics and game theory. And the people who built them and programmed them were thought-leaders in math, science and engineering. So computer programming became associated with people who were wicked strong in that skill set.

I think it’s time to disassociate it.

I am a huge supporter of all of the initiatives to refashion STEM stereotypes, and engage a more diverse set of people to pursue those professions. Especially the programs that target girls and young women. But I think there’s a strong belief out there that if you want to follow a STEM path, you need to have a strong aptitude for math as well as a passion for it.

So what about all the girls and young women (and others) who are inspired by subjects other than math? It’s important that they not self-select (or be counseled) out of programming. It puts them at a disadvantage. In my mind, being conversant in computer code is the entry price for career success in today’s creative economy. As I said in yesterday’s post, it’s hard to imagine the possibilities of what you can build if you can’t see the legos.

Coding needs a brand makeover. It could be repositioned as a thought process — another component of the critical thinking tool kit. It could be positioned as a foundation for anyone who wants to build new things. And for sure, we could do a better job telling people that even if math, science and engineering aren’t your gig, you can still kick-ass in programming.

Today, admission to most 4-year universities requires 2–3 years of a foreign language in high school. And then more at the college level to graduate.

This is completely outdated.

To best prepare our students for career success, both high-school and college students should be able to make an interest-based choice between foreign language and computer language to fulfill the requirements.

A working knowledge of a computer language is a practically a prerequisite for career preparation today regardless of your major or job choice. It doesn’t matter if you major in business, or communications or if you ever want to build an app. What does matter is that you know what the legos look like and approximately how they fit together so you can imagine the possibilities.

This one single change (universities allowing computer language to fulfill the foreign language requirement) has the potential to make the U.S. workforce more competitive within four to five years. An added benefit would be to increase the number of high school students graduating with a marketable, potentially high-wage skill.

I see two primary arguments against this idea and have a counter to both:

U.S. students should be able to communicate in a language other than English. But studying a single language only allows communication with the population that speaks that language. If you learn a computer language you can universally communicate with other programmers.

Learning a foreign language requires the brain to think in a new way. Learning a computer language also requires learning a new thought process, new syntax and new “grammar” structures. The only major difference is that you don’t speak a computer language.

Please hear me that I am in no way advocating that foreign language be removed from high school or college. But I do think we should be giving students a choice, given the role that code plays in today’s global economy. Learning Python or Java is no harder than learning French or Spanish. And it’s quite a bit easier than learning Chinese or another language with a different alphabet.

I studied a foreign language for four years in high school and another two semesters in college. Do you know how often that’s been useful to me in my career? No times. How about in my travels? Maybe five times.

Because I didn’t learn it at school, I’ve taught myself enough code to be conversant and it’s been hugely helpful. When I was leading a project staffed restructure and overhaul a website, it made a significant difference in my credibility and also the time to completion. Because I knew what was possible.

Right now I’m taking Udacity’s Intro to Computer Science class because I want to better understand the possibilities of data science as it applies to business strategy. And communicating with code is a fundamental building block that gets me to that goal.

The biggest obstacle to this proposal is the colleges themselves. For institutions filled with smart people they are incredibly slow to change. No matter how strong the imperative. To get there the committee on committees will need to form a committee to study it, debate it and make a recommendation. It would need approval from faculty, departments, deans and finally provosts. And to make any impact in the near term, this change would need to happen at many colleges at once. I get frustrated just thinking about it.

So what do you think? Should colleges allow computer language to substitute for foreign language if that’s the student’s choice?

I’ve written 10 new idea posts so far in my 20 Ideas in 20 Days project and I thought I’d take a quick minute to reflect on how it’s going.

This is harder than I thought. I thought I was a veritable font of ideas worth sharing. And when I brainstormed the 20 topics before I first posted, I figured those would be a starting point and I’d think of more as the project continued. But as I started writing some of those ideas ended up combined, I realized some weren’t really ideas but opinions and some just weren’t strong enough to share.

Writing your ideas forces you think about them from all angles. When you’re trying to explain your idea to someone else or debate its merits for the world to see, the strengths and weaknesses of your idea become clearer. For that alone, I think it makes sense for anyone with an innovative idea to write it down. Because if you’re ever going to do it, you’re going to have to explain it to other people. Working through it in writing will generate a stronger concept.

I’m pretty verbose. I’m aware that more succinct articles/posts get more reads. I’m finding it hard to compress concepts that I’m still working out for myself in what amounts to a written elevator pitch. I’ll be working on this days 11–20.

I’m publishing faster. Tara Mohr wrote a book, Playing Big, that suggests that many women are perfectionists and it harms them because they delay launching [whatever it is] with revision after revision. I’ve been thinking about that and the 80/20 rule. I’m getting better at getting the words out and hitting publish so I can keep moving forward.

Writing Puts Me in Flow. This is definitely an activity where I don’t feel time passing. Brainstorming, researching and writing are activities that make the time fly for me. An extroverted woman I know was feeling stuck in her life so she’s did 1 new thing a day for 50 days. That really doesn’t sound fun to me at all. Coming up with new ideas and writing every day? That was my approach to the exact same problem. I wonder if it would do us both more good to follow the other person’s path? Maybe I’ll try the one new thing project after this one.

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https://medium.com/p/38fb43944924Tue, 02 May 2017 19:53:08 GMT2017-05-02T19:55:21.268Z20 Days of Ideas — Day 10

How did you decide where you applied to college? Location? Available majors? Recommendations from family and friends? The rankings? Those postcards and emails from schools based on your scores?

If you’re like me, it wasn’t a very scientifically selected group. I ended up loving where I went to school, but looking back I don’t think it was the best match for me. I think there are other schools, including some that admitted me, that could have better helped me further my interests and education.

If you’re an elite student you might narrow your list to the top 10–15 schools, but today there are more elite students than the top schools have spots. So students are throwing darts — applying to 15 colleges — in hopes their application will resonate with an admissions officer. But outside of the top schools, how can you begin to make your picks? Needle in a haystack.

And what about the admissions side of the game? The top colleges are in competition with one another for the “best” students. But at some level, “best” becomes completely arbitrary. Every year, there is a pool of students that meets or exceeds the GPA/SAT/ACT threshold as defined by the scores of the most recently matriculated class. They all are either broad in many outside activities or deep in one or two. They all have superlative recommendations. And any school should be thrilled to have any of them.

And so it comes down to fit. The schools want to construct a diverse class of students that will thrive and contribute. But what they also want is for the kids they accept to matriculate. And graduate. But with the zillions of applications they receive (some tout a 4 or 5 percent acceptance rate), we’re back to the proverbial needle and haystack.

A Machine Learning Solution

Can we use machine learning to solve or at least alleviate the pain points on both sides of the equation?

There’s obscene amounts of data to work with on both the college side as well as the applicant side. Locations, proximity of major metropolitan area, walkability, test profiles, application essays, available majors, housing options, food options, number of women professors, popularity of majors, career aspirations of applicants and actual careers of graduates. I’m inclined to leave the financial aspect out for now as that’s another huge layer of complexity, but that could go in as well. I’m just throwing darts, but you get the picture.

Students would get a list of maybe 15–20 good matches. Colleges would get a list of the applicants most likely to matriculate and graduate. Otherwise the process remains the same.

The main difference is that students now have a map. It doesn’t mean they can’t look outside the list, but it’s a much better place to start than everywhere. And maybe, over time, it would mean that students could get the applications back down to five. Five is a number of schools you could visit — although it’s doubtful how useful this is in the decision process. Five is a number where you might talk to one or two current students or young alumni at each school. Five is a reasonable solution set where focused diligence might actually be useful.

On the other side, colleges would have a data-supported hypothesis of students most likely to fit into the community. And thrive. And matriculate. And graduate. They might decide to take a closer look at those applications. Not that they couldn’t admit other students, but a little more information can’t hurt.

A flaw in this idea is that over time, if both sides stick to the list, you’d create very homogenous schools. Which is just what admissions committees are trying to avoid. However, when you add back the self-selection of the students that matriculate, the current system is flawed as well.

I’m sure there are more holes in my idea. But I think there has to be a better way then the way we’re doing it today.

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https://medium.com/p/7027a014cbMon, 01 May 2017 19:17:05 GMT2017-05-01T19:17:05.892Z20 Days of Ideas — Day 9

“What traits do you think you need to be a successful entrepreneur?”

I was asked this question in an interview by a university student for a class project. I’m sure she expected me to give the standard litany —uncompromising vision, tenacity, strong (perhaps even aggressive) leadership skills, fearlessness, competitive, risk-loving and grit.

But I reject that list. There’s no research behind it. This is actually a male-biased stereotype that’s being used for pattern recognition by investors when they evaluate founders and CEOs.

And this is a key reason why women get less than 3 percent of the venture capital.

Is this the list that you think of? If so, ask yourself…..

Where did this list come from?

The News Media. TechCrunch quoted a VC a few years back that he thought founders should be so fearless as to be willing to run across the freeway blindfolded. (In my mind, that’s not a quality of a successful founder, that’s a quality of the winner of the Darwin awards but I digress.) These types of characterizations are rampant in news articles because the sources and writers are predominately men. I couldn’t find a breakdown of male vs. female business journalists, but a 2013 report shows women make up only about a third of the entire journalism industry (supervisors, copy/layout editors/online producers, reporters/writers, photographers/artists/videographers). I’m going to guess if we tease out the women business journalist numbers, that percentage would drop even lower.

Entertainment. I often open up workshops with the question, “Name some successful entrepreneurs.” Even when the audience is 50 percent women, the answers I get are almost always 100 percent male. We’ve bestowed celebrity status on certain entrepreneurs. Steve Jobs. Mark Zuckerberg. Elon Musk, Jeff Bezos. Through movies and books, a picture emerges of arrogance, unprofessional behavior, an unwillingness to compromise and not really caring about anything or anyone except the enterprise.

Where did this list not come from?

Actual research. There are a number of reasons we don’t have rigorous research to back up these meta-entrepreneur characteristics. First, entrepreneurship has only recently (like in the last 10 years) been deemed an area of acceptable academic research.

Second, the research that does exist rarely reflects on gender or even reports gender difference. According to data from a 2015–2016 survey, women only make up 20 percent of business school tenured faculty in the U.S. Not that one necessarily follows the other, but it’s a pretty reasonable assumption that much of the research we do have is based primarily on the study and responses of male founders and entrepreneurial leaders.

Where does that leave us?

I’m asking business journalists to cultivate women founders as sources. I’m asking the academic community to take on research in this area that takes gender into account.

And I’m calling for a whole new list. One where women can recognize themselves. I’ve spent large parts of the last six years mentoring women entrepreneurs and more recently formally interviewing them. Here are the traits I’ve seen consistently in successful women founders/entrepreneurs:

self-awareness

self-confidence (but without bravado)

curiosity and willingness to learn

ability to collaborate

willingness to listen

willingness to seek help when necessary

intellect

achievement oriented

able to make decisions but willing to change those decisions given new information

Female founders — I want to hear from you. What else belongs on the list?

Big corporations are eager to infuse innovation and entrepreneurial thinking into their cultures. Startups are often desperate for specific skill sets but unable to afford experience.

A Startup Fellowship Program

Both problems could be solved by creating a startup fellowship program. Here’s how it would work. Let’s say the corporate venture arm has 6–10 companies in it’s portfolio. These companies deliver a wish list of the skills and expertise they believe will help them rapidly move forward.

The company launches a selective, funded program where experienced employees, interested in working at startups/learning about new technology are shared with the portfolio company for a year.

The salary of these employees is co-funded by the startup and the corporation. Additionally, the employees receive a small amount of stock options from the startup to make sure everyone’s interests are aligned (they can have a vesting period equal to the time frame of the program).

The corporation gets an employee who gains skills in problem solving and innovation, first-hand knowledge of the adjacent or potentially disruptive market and who may be able to help facilitate a deeper strategic relationship down even after they’ve completed the program.

The startup gets an employee with more skills and experience for less cost and therefore an improved chance for success. Additionally, they onboard a person with first-hand knowledge of the investor company’s resources and how to access them.

What If the Fellows Leave to Join the Startup?

Actually, this might be a benefit and could be integrated into the program so at the end of the term the fellow and startup can mutually decide to make the transfer permanent (the employee would move fully to the startup’s payroll at a negotiated rate).

If the employee decides to remain at the startup, the company still benefits from having a friend inside and the increased value of the company — basically they continue to get ROI from the training and investment in that employee if they are working for a portfolio company.

However, I suspect that most people in the program will choose to return to the larger corporation. The ambiguity and instability of startup life are not the ideal environment for most people.

Post Fellowship Integration

In order for the program to succeed, the Fellowship recipients will need to have a clear career benefit from participation. Ideally, they will be reintegrated into their functional areas, in a position where they can share what they’ve learned and potentially lead a new project or initiative. This allows the program to create a viral effect with the Fellows spreading innovative thinking and a bias towards action throughout the company.

I was standing in line the other day, and the group in front of me was discussing Uber. Not about the current management and culture issues, but about how drivers had purposely gotten lost, over-charged by taking the long way around etc. Then someone in the group asked, “has anybody ever tried Lyft?”

This is Uber’s brand at this moment because it’s what their customers are saying. Customers don’t trust them, and the damage is real.

There’s a trend among startups to insist they don’t need old-school brand marketing. That data-driven, growth-hacking on its own is enough. I’m gonna say nope and that the Uber situation illustrates why.

Where Brand Beats Data

With data you can quantify the funnel. Who, what, when, where and how much. And because the ROI is directly traceable, CFOs readily approve the spend to improve the numbers. We spent w dollars on tactic x and increased data point y by percentage z. It makes the left brain very happy.

But guess what. Your customers are more that just data. They have hearts, they have right brains and they don’t always behave rationally. So even if you think you have all the facts, (as far as I know) you still don’t know what they’re saying to their friends and colleagues in person.

And that’s Brand. It’s whatever shorthand your customers (and non-customers) use to identify you. It’s that first association that pops into their brains. Form an image in your mind about the customer who is delighted by each product/company below.

Harley Davidson vs. Ducati

Tinder vs. Match.com

Facebook vs. Snapchat

I think you get the picture.

Three Ways Not Having a Brand Will Cost You

Slower growth. If you are the one and only solution to a problem, early-adopters and maybe even the early majority will buy your thing. But without a brand — an emotional connection that drives the change — the rest of the pack is going to continue solving the problem using whatever work-around they were using before.

Competing on Price. If you haven’t captured your customer’s hearts and absolutely delighted them — the minute a competitor comes along you’re competing on price and price alone. And heaven forbid you have a PR problem or trust issue like Uber or United. Because then, people may disregard price and go with the competition on principle.

Higher Customer Acquisition Costs (CAC). If you have brand evangelists (not people you hire, but customers) recommending your brand and singing your praises offline, it’s going to help you break through the noise. Further, with a brand, your target segments will self-identify with your product. They will come to you. If you don’t shape what customers say about you, your CAC is going to be that much higher because you’re going to spend a bunch of money trying to generate discovery and break through the noise.

Building a Brand

So how do you go about building a brand? There are zillions of books and articles on the subject. But a good place to start is by talking to your customers. Find out from them — in their words — why they choose/use your product and how it’s different — really super different — than the competition. Build a message around that. Then feel free to A/B test the heck out of it.

Bottom line. If the messaging associated with your growth hacking came from inside the company rather than the customers, it’s not a brand. And without a brand, when the competition or misstep happens (and it will happen), you’re at #delete.